Beware! VelocityTradeFX is an offshore broker! Your investment may be at risk.
RECOMMENDED FOREX BROKERS
Don’t put all your eggs in one basket. Open trading accounts with at least two brokers.
VelocityTradeFX promises that it is a forex broker that makes trading easy and secure. But even a basic fact check reveals that it is nothing of the sort. VelocityTradeFX is an anonymous, unauthorized website that shares many commonalities with other fake brokers we’ve reviewed. It would be a serious mistake to trust your money to VelocityTradeFX. Let’s see exactly why.
VELOCITYTRADEFX REGULATION AND SAFETY OF FUNDS
When we look at the homepage of this website we immediately notice that a very important piece of information is missing – what is the name of the company that runs this alleged broker.
The Terms and Conditions and other legal documentation also do not mention a legal entity name, which is completely unacceptable. The legal documentation in question is also something we’ve seen dozens of times. These texts have been used by many fake brokers who only change the brand name. The list of scammers using this exact same documentation includes Aceinvest.co, Next Pro Trade Finvis, Capital Red, 24Trades and many more.
VelocityTradeFX provides two contact addresses – in the UK and Canada.
The lack of a company name is sufficient indication that VelocityTradeFX does not have licenses to provide brokerage services in these regulated jurisdictions. No authorized company whose name includes “VelocityTradeFX” can be found in the UK’s Financial Conduct Authority (FCA) and the Investment Industry Regulatory Organization of Canada (IIROC) databases.
However, this website has come to the attention of the British Columbia Securities Commission. This local regulatory institution warns that VelocityTradeFX is not authorized to provide financial services:
The Terms Conditions mention quite different jurisdictions – Estonia and the Grenadines, the latter presumably meaning Saint Vincent and the Grenadines (SVG). As mentioned, these texts are used by many scam websites, and those statements are just a part of the copy-pasted contents.
The anonymous company behind the VelocityTradeFX is in all likelihood indeed based in an offshore institution such as the SVG, where there are no regulations on brokerage activities.
Before investing your money, you should make sure that you have chosen a broker that is truly licensed by a regulatory institution such as FCA, Commodity Futures Trading Commission (CFTC) in US, Australian Securities and Exchanges Commission (ASIC) or some EU regulator like Cyprus Securities and Exchange Commission (CySEC).
Clients of these brokers receive protections such as negative balance protection and segregation of the client’s funds from the broker’s funds. In the EU and the UK, brokers must also participate in guarantee schemes that cover a certain amount of the trader’s investment if the broker becomes insolvent. These guarantees amount to up to 20 000 EUR in the EU and 85 000 GBP in the UK. However, the likelihood of such a bankruptcy is low because regulators also have significant net capital requirements that companies must maintain – EUR 730 000 in UK and Cyprus, AUD 1000 000 in Australia and at least 20 million USD in the United States.
VELOCITYTRADEFX TRADING SOFTWARE
VelocityTradeFX uses a rudimentary web-based platform such as we have also seen repeatedly on other scammers’ websites. Financial scammers often use trading platforms to fool their victims that their money is actually being invested. However, this trading is entirely fictitious and the money goes directly into the scammers’ pockets.
While the platform has the basic features for placing orders, customizing charts and application of technical indicators, it lacks the more advanced functionality found in the most widely used trading platforms in the industry, MetaTrader 4 (MT4) and MetaTrader 5 (MT5). These platforms have established themselves as industry standard because they offer a wide range of features, including a variety of options for customization, multiple account usage, designing and implementing custom scripts for automated trading and backtesting trade strategies.
VELOCITYTRADEFX TRADING CONDITIONS
Since VelocityTradeFX has no legal authorization to offer forex trading and is clearly out to defraud us, the trading parameters specified on the website have no real meaning. However, they do provide some additional clues by which we can identify the fake broker.
VelocityTradeFX claims to offer three types of trading accounts, with a minimum deposit starting at 5,000 USD. This is a ridiculously high amount, especially considering that a number of leading brokers invite you to start trading with amounts as low as 50 USD or even 5 USD.
Account descriptions specify leverage levels between 1:200 and 1:500. This is not a level that you see with regulated brokers. Trading with high leverage allows higher profits, but also increases the risk of sudden and excessive losses proportionally. All leading regulators limit leverage for retail traders. In the EU, UK and Australia the maximum permitted level is 1:30 and in the US it is 1:50. This maximum level only applies to trading major currency pairs, with even more limited leverage for more volatile assets.
VELOCITYTRADEFX DEPOSIT/WITHDRAW METHODS AND FEES
The deposit menu is not available if the account is not approved, so we were unable to confirm whether VelocityTradeFX allows wire transfer and credit card transactions as claimed. Financial fraudsters almost never use conventional payment methods. Instead, they routinely direct their victims to cryptocurrency transactions that do not allow refunds and chargebacks.
The Terms and Conditions specify quite high withdrawal fees, up to 50 USD. This is especially outrageous considering that most legitimate brokers do not charge transaction fees at all. But it is very doubtful that I will be able to withdraw any amount from VelocityTradeFX at all. This is guaranteed by the predatory clauses that make this set of pseudo-legal texts so popular with scammers.
First, if the account has received a bonus, withdrawal of profits is only allowed after reaching a minimum traded volume equal to 30 times the deposit amount plus the bonus. One of these clauses provides for a hefty levy of 10% on accounts that withdraw funds before they reach “200 in turnover”. It doesn’t specify 200 what – presumably they mean 200 lots, i.e. 20,000,000 currency units.
Another 10% is drawn from accounts that have not been active for 6 months, which is also far from acceptable.
HOW DOES THE SCAM WORK
There are many scammers lurking on the internet, luring people with promises of easy riches. These scammers arouse the curiosity of their potential victims through online ads, videos, comments and other content on social networks. Often the initial hook is get-rich-quick tips that link to websites and mobile apps of fake brokers or fake investment firms. After clicking on the ad or downloading the mobile app and having given their contact details, the victims are usually swiftly called by fraudsters presenting a concrete “investment proposal”.
These scammers are very aggressive and often even try to persuade the victims to allow them to take control of their computer remotely in order to make certain money transfers. The fraudsters also try to convince the victims to invest increasingly higher amounts of money. They also make promises of repayment in exchange for one last money transfer. This is a technique to collect even more money from their victims. When you try to withdraw your money, your request is blocked by hidden conditions and huge fees. Fraudsters can also simply disappear because they hide behind fake names and offshore companies.
WHAT TO DO WHEN SCAMMED
First of all, it is important that you do not try to recover your money by trusting people who claim to offer such a service for an upfront fee. These are also 100% scammers. If you used a credit or debit card for the transactions to the scammers, you could ask for a chargeback. But such a claim could be disputed if you provided the scammers with a copy of an ID or proof of address. Scammers usually get their victims to use cryptocurrencies that don’t allow refunds. In any case, it is advisable to inform the relevant financial authorities in your country and spread the word online to warn others not to fall into the same trap.